After roping in India’s largest mortgage lender and a social venture fund as investors, entrepreneur Jaithirth (Jerry) Rao’s Value & Budget Housing Corporation has raised $26 million or Rs 119.3 crore from global private equity giant Carlyle Group. Existing investors in VBHC, which include HDFC and India Financial Inclusion Fund, have also committed additional capital alongside Carlyle, according to a statement.

This is the second investment of the year by a global private equity firm in India’s affordable housing space. Earlier, Warburg Pincus set up a Rs 1,400 crore JV with its portfolio company Lemon Tree Hotels.

The funding will be used by VBHC to finance the building of new homes for its flagship project Vaibhava in Bangalore. The investment will come from FCG IX, a part of Carlyle Asia Growth Partners IV which is a $1.04 billion sector-agnostic growth capital fund. In June, Carlyle invested in Visen Industries Ltd, a manufacturer of water-based polymer emulsions in India.

Shankar Narayanan, managing director and head of Carlyle Growth Capital in India, has joined the board of VBHC.

The other co-founder of VBHC is P.S. Jayakumar, who was earlier Citibank’s country head for consumer business in India and the Asia-Pacific and head for consumer lending business in the Asia-Pacific. Rao and Jayakumar have also promoted Home First Finance Company, a housing finance firm which targets customers buying their first homes. Home First Finance is backed by Bessemer Venture Partners.

VHBC will plan projects in the urban periphery, well-connected to the city’s central transportation system. The company is targeting to build one million homes in the next 10 years, across urban India.

Its maiden project Vaibhava, coming up in Bangalore’s Electronic City suburb, has already sold more than 1,000 units in the last 12 months and the sale of another 900 units will start next month. The project offers studio apartments, as well as one-bedroom and two-bedroom flats within a price range of Rs 5.3-Rs 11.5 lakh. It has already started handing over the units to the buyers. VBHC also plans to target markets like Chennai and Mumbai.

“VBHC is a play on the strong, unmet demand for affordable housing in India, which is estimated at more than $200 billion. The demand for affordable housing will continue to grow quickly due to urbanisation, increasing number of nuclear families, rising income levels and strong desire for home ownership,” said Wayne Tsou, managing director and head of Carlyle Asia Growth Capital.

“We are very happy to be associated with The Carlyle Group and hope to leverage their relationships as we continue to fulfil our vision of building a million affordable, entry-level homes in this country,” VBHC chairman Jaithirth Rao commented on the investment.

“VBHC has been able to transform real estate development into a lean industrial process amenable to mass production with the use of the ‘form’ technology for construction. VBHC plans to replicate the success of the project Vaibhava in Bangalore and aims to develop a strong, nationwide footprint,” said P.S. Jayakumar, managing director of VBHC.